Washington Estate Tax Changes for 2025
Washington estate tax doesn’t get much attention. In part, this is because there have not been any changes to our state’s estate tax since 2018, when the last adjustment for inflation to the applicable estate tax exclusion amount occurred. The applicable exclusion amount is the value of an estate that is exempt from estate tax. This means that Washington estate tax is imposed on the value above the applicable exclusion. After a change in federal law to how the consumer price index was calculated in 2018, the Washington exclusion amount has sat at $2.193 million.
Changes are afoot for Washington estate tax in 2025, however. On January 1, 2025, a new estate tax spousal personal residence exclusion went into effect. This law allows the estates of married people to exclude the value of a personal residence from the calculation used to determine whether a Washington estate tax return needs to be filed when one spouse dies. The new exclusion only applies if there is a surviving spouse, that spouse inherits their personal residence, and both spouses occupied the residence for at least six months of the year prior to the death. In addition, the law includes exceptions to the occupancy requirement if one or both spouses were in long-term care during the year prior to death. The new law means that a Washington estate tax return will not be required if the value of the deceased spouse’s estate (without the value of the personal residence) is less than the applicable exclusion amount.
More change to Washington’s estate tax is on the horizon. In April, the Washington legislature passed a bill that will increase the applicable estate tax exclusion amount for Washington estate to $3 million for people who die between July 1, 2025, and January 1, 2026. Beginning in 2026, the applicable exclusion amount will once again be adjusted for inflation (based on the federal consumer price index) each year. In addition, this bill increases the top estate tax rate – imposed on Washington taxable estates greater than $9 million – from 20% to 35%. As of May 14, 2025, this bill had been delivered to the governor, but the governor has not yet signed the bill and enacted the law.
To learn more about Washington’s Estate Planning, please contact Beresford Booth at info@beresfordlaw.com or by phone at (425) 776-4100.
